Monday Reads: Happy National Napping Day!

Good Afternoon Sky Dancers!

Now this is a national day of observance that I can go all in on! I’m thrilled BB let me know about the reason for the season having taken two days of morning naps in a row!

National Napping Day is observed annually the day following the return of daylight saving time. National Napping Day provides everyone with the opportunity to have a nap and catch up on the hour of sleep they lost due to the spring forward time change.

So, now that we’ve established a visual and emotional happy place, let’s move into the utter display of corruption and incompetence presented by Education Secretary “I’m mostly misunderstood” DeVos. Can any one be more clueless about a job than this woman other than KKKremlin Caligula himself? Leslie Stahl managed to ask her basic questions that left the Secretary flummoxed and stumbling on 60 Minutes.

The reason Betsy DeVos wanted to be secretary of education was so she could promote school choice, offering parents options other than traditional public schools – where 90 percent of kids go. She has proposed massive cuts in public education funding and wants to shift billions to alternative players like private, parochial and charter schools.

Betsy DeVos: We have invested billions and billions and billions of dollars from the federal level And we have seen zero results.

Lesley Stahl: But that really isn’t true. Test scores have gone up over the last 25 years. So why do you keep saying nothing’s been accomplished?

Betsy DeVos: Well actually, test scores vis-à-vis the rest of the world have not gone up. And we have continued to be middle of the pack at best. That’s just not acceptable.

Lesley Stahl: No it’s not acceptable. But it’s better than it was. That’s the point. You don’t acknowledge that things have gotten better. You won’t acknowledge that, over the–

Betsy DeVos: But I don’t think they have for too many kids. We’ve stagnated

Lesley Stahl: Okay, so there’s the big argument. So what can be done about that?

Betsy DeVos: What can be done about that is empowering parents to make the choices for their kids. Any family that has the economic means and the power to make choices is doing so for their children. Families that don’t have the power, that can’t decide: “I’m gonna move from this apartment in downtown whatever to the suburb where I think the school is gonna be better for my child” if they don’t have that choice – and they are assigned to that school, they are stuck there. I am fighting for the parents who don’t have those choices. We need all parents to have those choices.

Like most right wing extremist theocrats, DeVos isn’t interested in the truth about a train wreck in Michigan she helped create. Choice is a code word for publicly funded Christian Madrassas that are segregated by social class and race.

Secretary of Education Betsy DeVos, former chair of Michigan’s Republican Party, appeared taken aback when asked during a 60 Minutes interview Sunday whether her home state’s school’s have become better under policies she pushed.

As chair of the American Federation for Children in Michigan, DeVos worked to expand chartered private schools in the state. Most of the reading and math scores among students at charter schools in Michigan are below average and overall academic progress lags behind other states.

“Have the public schools in Michigan gotten better?” 60 Minutes journalist Lesley Stahl asked DeVos in the interview, pointing out that public schools also haven’t flourished under policies she championed.

“I don’t know. Overall—I can’t say overall that they have all gotten better,” DeVos replied.

Along with her husband Dick DeVos, a billionaire heir to the Amway fortune, DeVos has backed state bills in Pennsylvania, Indiana, and Florida for voucher programs where students can get public funding to subsidize the cost of attending a private or religious school. She proposes expansion of that system and has pushed for it in Michigan for decades.

“Your argument that if you take funds away that the schools will get better, is not working in Michigan where you had a huge impact and influence over the direction of the school system here,” Stahl said.

“I hesitate to talk about all schools in general because schools are made up of individual students attending them,” DeVos replied. She said she had “not intentionally visited schools that are underperforming” to find out what is going wrong.

DeVos will be heading up the Task Force on School Safety. Wonder if that means Blackwater units in every school? And what about those Grizzlies?

U.S. Education Secretary Betsy DeVos will lead a commission tasked with broadly examining ways to protect schools from gun violence, the White House said Sunday.

Administration officials also said the White House would support arming school personnel who volunteer for the job, offering federal funds to provide “rigorous firearms training” to qualified employees.

The proposal has angered education groups, who have said arming educators could put both adults and students at risk. National Education Association President Lily Eskelsen García last month said, “Bringing more guns into our schools does nothing to protect our students and educators from gun violence.”

But DeVos, who has met with students, teachers and families in the wake of the deadly Feb. 14 shooting at Marjory Stoneman Douglas High School in Parkland, Fla., said little progress had been made protecting students over the past several years. “No student, no family, no teacher and no school should have to live the horror of Parkland or Sandy Hook or Columbine again,” she said.

While not immediately committing to any ideas or timetables, DeVos said, “No stone will be left unturned” in the effort to uncover and highlight evidence-based approaches proven to reduce violence.

“We’ve had to talk about this topic way too much over the years,” DeVos told reporters during a conference call Sunday. “And there’s been a lot of talk in the past but very little action.”

Still not convinced she’s like one of the worst people in the world. Take her student loan storm trooper attitude and link it to this headline: ‘Education Department awards debt collection contract to company once tied to DeVos’.

A company that once had financial ties to Education Secretary Betsy DeVos was one of two firms selected Thursday by the U.S. Department of Education to help the agency collect overdue student loans. The deal could be worth hundreds of millions of dollars.

The decision to award contracts to Windham Professionals and Performant Financial Corp. – the company in which DeVos invested before becoming secretary – arrives a month after a federal judge ordered the department to complete its selection of a loan collector to put an end to a messy court battle. Windham and Performant beat out nearly 40 other bidders for contracts valued at up to $400 million, but their win may be short-lived if the losing companies fight the decision.

The selection of only two [companies] opens the door to protests from the unsuccessful bidders,” wrote Michael Tarkan, senior research analyst at Compass Point, in a research note on Performant. “Based on prior contract awards, we would not be surprised to see protests, lawsuits and appeals which could all delay the start date for the new contract.”

Historically, the department has used as many as 17 companies to recoup past-due student loans. Earlier attempts to whittle down the number of firmshave been met with resistance. Companies that lost out on a 2016 debt collection contract have been embroiled in a lawsuit that has prevented the federal government from assigning new accounts.

But, hey, she’s “conservative” so Twink DeVos should be all about state’s right! Am I right? Uhmmmmm, nope!

The Education Department issued guidance Friday informing state regulators to back off the companies managing its $1.3 trillion portfolio of student loans, arguing that only the federal government has the authority to oversee its contractors.

“State regulation of the servicing of direct loans impedes uniquely federal interests,” the department wrote. “State regulation of the servicing of the Federal Family Education Loan Program is preempted to the extent that it undermines uniform administration of the program.”

The notice arrives as states have stepped in to fill what many see as a void in the federal oversight of student loan servicers, the companies the Education Department pays nearly $1 billion to handle debt payments. The move has created consternation within the industry, which has lobbied Education Secretary Betsy DeVos and Congress to prevent states from imposing additional rules and regulations. Now the department is taking action, but some legal experts say the declaration is a hollow gesture.

“Nowhere in this document does the Department of Education quote a statute from Congress that says the department is authorized to block states from stopping deceptive debt collection practices. That’s because such a law does not exist,” said Christopher Peterson, a law professor at the University of Utah and former enforcement attorney at the Consumer Financial Protection Bureau. “Many states are likely to view this document as legally dubious . . . and will wait for courts to weigh in with their own interpretation.”

California, Connecticut and the District of Columbia require servicers to obtain a license to operate within their borders as a way to bring the companies under their regulatory purview. Their local agencies have the authority to monitor loan servicers’ compliance with federal laws, investigate their behavior and refer cases to the attorney general.

And from that radical rag Forbes Magazine“4 Ways Betsy DeVos Plans To Make It Harder For Ripped-Off Students To Get Loan Forgiveness.” Trump University any one?

With thousands of “borrower defense to repayment” applications pending, Betsy DeVos wants to impose a higher burden of proof for defrauded students seeking student loan forgiveness.

Borrower defense offers federal student loan forgiveness for students who were defrauded by for-profit colleges, including the now-closed Corinthian Colleges.

If this revision from the Department of Education goes through, students will face bigger hurdles along the path to borrower defense student loan forgiveness.

Although it’s unclear whether the proposal would affect existing applications, it would at least introduce four major challenges for future applicants.

Other headlines guaranteed to drive you back under the covers via Memeorandum:

John Bacon from USA Today: Death penalty for drug dealers? Count Trump in

Anita Kumar from McClatchy DC: Ivanka Trump never cut ties with the Trump Organization. That’s turned into a problem.

NBC News: Qataris opted not to give info on Kushner, secret meetings to Mueller

Jake Pearson from Associated Press: Trump Jr., donor have longtime undisclosed ties

Annie Gowen from The Washington Post: Hillary Clinton says ‘follow the money’ in the Trump-Putin relationship

And now, you can close your eyes and repeat after me: Let’s make America and America again!

What’s on your reading and blogging list today?


Just in Case You Didn’t Notice …

Congress finally renewed highway funds and extended the lower student loan rate.  This news comes via the HILL.  This should save a few jobs and fill a few potholes.  It also renews my Flood Insurance during the hurricane season!!!

Congress on Friday approved legislation that will extend federal highway programs through 2014, a low interest rate on student loans for one year, and the National Flood Insurance Program (NFIP) for five years.

Leaders in the House and Senate negotiated the giant package, leaving no doubt that it would have enough support to pass. The bill will likely be the last major piece of legislation approved by Congress until after the November elections.

The House voted 373-52 in favor of the bill, which was supported by every voting Democrat, while 52 Republicans opposed it. In the Senate, the tally was 74-19, with 23 Republicans joining every Democrat in voting for the measure. Sen. Olympia Snowe (R-Maine) voted present, while Sen. Daniel Inouye (D-Hawaii) missed the vote.

White House spokesman Jay Carney said President Obama looks forward to signing the bill.

Congress faced a weekend deadline for extending the highway and student loan provisions. The rates for federally backed student loans were set to double from 3.4 percent to 6.8 percent, and transportation funding was due to expire.

See?  They can work together ever so often.

Monday Morning Reads

Good Monday Morning! Not a day goes by without more examples of Republican stupidity. I’ve got several for you this morning. First up, Rick Perry had a talk with Donald Trump and now Governor Goodhair thinks President Obama’s birth certificate might be fake. That legend will never die. Think Progress:

In an interview with PARADE Magazine, Perry said that he recently met with Donald Trump and discussed the issue. Perry stated that he doesn’t “have a definitive answer” on whether Obama was born in the United States or “any idea” if Obama’s birth certificate is real….

Perry recently secured the endorsement of Orly Taitz, known as the “birther queen” for repeatedly filing lawsuits asserting that Obama was born outside the United States. Taitz told ThinkProgress that she believed Perry will use the birther issue to attack Obama.

From the interview:

Governor, do you believe that President Barack Obama was born in the United States?
I have no reason to think otherwise.

That’s not a definitive, “Yes, I believe he”—
Well, I don’t have a definitive answer, because he’s never seen my birth certificate.

But you’ve seen his.
I don’t know. Have I?

You don’t believe what’s been released?
I don’t know. I had dinner with Donald Trump the other night.

That came up.

And he said?
He doesn’t think it’s real.

And you said?
I don’t have any idea. It doesn’t matter. He’s the President of the United States. He’s elected. It’s a distractive issue. “

“distractive?” Is that in the dictionary?

Herman Cain is still trying to walk back his accidentally pro-choice comments on abortion. From Politico:

Herman Cain tried to clean up the running confusion over his position on abortion last night, but in the meantime opened questions about his grasp of the Constitution.

In an interview with David Brody last night, Cain said he’d sign a pro-life constitutional amendment if it crossed his desk as president.

“Yes. Yes I feel that strongly about it. If we can get the necessary support and it comes to my desk I’ll sign it,” he said. “That’s all I can do. I will sign it.”

The only problem with that statement? Presidents don’t sign constitutional amendments — they’re passed in Congress and then need to be ratified by the states, and the president plays no formal role in the process.

Is this guy the most ignorant person to ever run for president? He’s worse than Michele Bachmann.

It appears Mitt Romney is about to do another flip flop: Romney, Once a Critic, Hedges on Flat-Tax Plans

As several leading Republican presidential candidates embrace a flat tax as a core campaign position, one contender stands out in not doing so: Mitt Romney, who has a long record of criticizing such plans and famously derided Steve Forbes’s 1996 proposal as a “tax cut for fat cats.”

Lately, though, his tone has been more positive. “I love a flat tax,” he said in August.

Flat-tax plans have come and gone before, and analysts note that they have tended to lose support once they come under scrutiny. But Mr. Romney’s support of the concept of a flat tax underscores the tightrope he is walking as taxes become a larger focus of the Republican presidential race and he faces rivals’ accusations of inconsistency on the issues.

But Ron Paul wins today’s prize for Republican stupidity. He wants to get rid of student loans.

Republican presidential contender Ron Paul said Sunday he wants to end federal student loans, calling it a failed program that has put students $1 trillion in debt when there are no jobs and when the quality of education has deteriorated.

Paul unveiled a plan last week to cut $1 trillion from the federal budget that would eliminate five Cabinet departments, including education. He’s also wants young workers to be able to opt out of Social Security.

The student loan program is not part of those cuts, but Paul said Sunday on NBC’s “Meet the Press” that he’d kill the loan program eventually if he were president. That could put him at odds with some of his young followers, many of whom are college students.

Turning to economic issues, the Financial Times has a scary article about the possible failure of the Euro.

It is time to prepare for the unthinkable: there is now a significant probability the euro will not survive in its current form. This is not because I am predicting the failure by European leaders to agree a deal. In fact, I believe they will. My concern is not about failure to agree, but the consequences of an agreement. I am writing this column before the results of Sunday’s European summit were known. It appeared that a final agreement would not be reached until Wednesday. Under consideration has been a leveraged European financial stability facility, perhaps accompanied by new instruments from the International Monetary Fund.

A leveraged EFSF is attractive to politicians for the same reason that subprime mortgages once appeared attractive to borrowers. Leverage can have different economic functions, but in these cases it simply disguises a lack of money. The idea is to turn the EFSF into a monoline insurer for sovereign bonds. It is worth recalling that the role of those monolines during the bubble was to insure toxic credit products. They ended up as a crisis amplifier.

To be honest, the article is a bit too technical for me to follow, but maybe Dakinikat can help me if she has sufficiently recovered from her nightmarish trip to Denver. Paul Krugman says Europe’s problem is (what else?) the stupidity of austerity.

First, the grim news from Greece is, as many commentators are pointing out, a big refutation for the doctrine of “expansionary austerity.” And it’s worth pointing out that European leaders, and especially the ECB, went in for that doctrine in a big way. Look at the June 2010 monthly report of the ECB (pdf), specifically the discussion of “fiscal consolidation” on page 83 and following. Basically, the ECB pooh-poohs any notion that austerity would have major negative effects on the economy, suggests that it’s quite likely that the confidence fairy will make everything OK, and specifically says that

Determined action on the part of governments to undertake fiscal and structural reforms is necessary to preserve stability and cohesion in the euro area. A sustained commitment to consolidation, possibly including a speeding up of current plans and their delivery, is required from all governments to ensure that the time afforded by the exceptional measures is used to put public finances on a permanently sounder footing.

So the ECB was calling for austerity everywhere. Was any concern expressed about how that would affect Europe-wide growth? Was there any suggestion of expansionary monetary policy to offset such a coordinated fiscal contraction? No and no.

And now they’re shocked, shocked that the Greek economy is plunging into a hole.

Maybe Ron Paul has a solution. LOL

Fannie posted this link last night, but I thought it should be on the front page: Republicans Turn Judicial Power Into a Campaign Issue

Republican presidential candidates are issuing biting and sustained attacks on the federal courts and the role they play in American life, reflecting and stoking skepticism among conservatives about the judiciary. Gov. Rick Perry of Texas favors term limits for Supreme Court justices. Representatives Michele Bachmann of Minnesota and Ron Paul of Texas say they would forbid the court from deciding cases concerning same-sex marriage. Newt Gingrich, the former House speaker, and former Senator Rick Santorum of Pennsylvania want to abolish the United States Court of Appeals for the Ninth Circuit, calling it a “rogue” court that is “consistently radical.”

Criticism of “activist judges” and of particular Supreme Court decisions has long been a staple of political campaigns. But the new attacks, coming from most of the Republican candidates, are raising broader questions about how the legal system might be reshaped if one of them is elected to the White House next year.

I’m going to end with this funny Halloween-themed satire from The New Yorker: Dear Mountain Room Parents, by Maria Semple. Here’s a bit of it, but please read the whole thing. You won’t be sorry.

Hi, everyone!

The Mountain Room is gearing up for its Day of the Dead celebration on Friday. Please send in photos of loved ones for our altar. All parents are welcome to come by on Wednesday afternoon to help us make candles and decorate skulls.



Hi again.

Because I’ve gotten some questions about my last e-mail, there is nothing “wrong” with Halloween. The Day of the Dead is the Mexican version, a time of remembrance. Many of you chose Little Learners because of our emphasis on global awareness. Our celebration on Friday is an example of that. The skulls we’re decorating are sugar skulls. I should have made that more clear.



Some of you have expressed concern about your children celebrating a holiday with the word “dead” in it. I asked Eleanor’s mom, who’s a pediatrician, and here’s what she said: “Preschoolers tend to see death as temporary and reversible. Therefore, I see nothing traumatic about the Day of the Dead.” I hope this helps.


It gets funnier, so please go read the rest! Now what are you reading and blogging about today?

It’s Saturday!

Happy Saturday Sky Dancers!! It’s a beautiful fall day here in Indiana, but I’m looking forward to getting back to Boston. I’ll be taking off in a couple of days and I hope to be home by Tuesday or Wednesday. My mom is going along for the ride so she can hang out with her youngest grandsons for awhile. It will be fun, because she’ll be there over Halloween. But enough about my boring life–let’s get to the news.

This story is a couple of days old, but still worth reading. Via BDBlue at Corrente, Which GOP candidate do you think has raised the most money from Wall Street?

Barack Obama!

Despite frosty relations with the titans of Wall Street, President Obama has still managed to raise far more money this year from the financial and banking sector than Mitt Romney or any other Republican presidential candidate, according to new fundraising data.

Obama’s key advantage over the GOP field is the ability to collect bigger checks because he raises money for both his own campaign committee and for the Democratic National Committee, which will aid in his reelection effort.

As a result, Obama has brought in more money from employees of banks, hedge funds and other financial service companies than all of the GOP candidates combined, according to a Washington Post analysis of contribution data. The numbers show that Obama retains a persistent reservoir of support among Democratic financiers who have backed him since he was an underdog presidential candidate four years ago.

And get this–Obama has raised nearly twice as much as Romney from the Mittster’s old firm, Bain Capital! So don’t believe all those stories in the media about the Wall Street titans switching to Mitt.

Here’s another “breaking news” story from Forbes: US Businesses Not Being Strangled By Regulation And Taxation, World Bank Says. Gee, no kidding? But the Republicans say that’s the main cause of our economic problems, don’t they?

The World Bank uses indicators such as time spent to set up a business to getting credit, among other things, in benchmarking the 183 countries it ranks in “Doing Business”. The report measures and tracks changes in the regulations applied to domestic companies in 11 areas in their life cycle–such as investors rights, taxation, cross border transactions, legality and enforcement of contracts and bankruptcy law. A fundamental premise of doing business is that economic activity requires good rules that are transparent and accessible to all, not just big business. Such regulations should be efficient, the World Bank states, striking a balance between safeguarding some important aspects of the business environment and avoiding distortions that impose unreasonable costs on businesses. “Where business regulation is burdensome and competition limited, success depends more on whom you know than on what you can do. But where regulations are relatively easy to comply with and accessible to all who need to use them, anyone with talent and a good idea should be able to start and grow a business (legally),” the World Bank said.

Where does the supposed regulation and taxation crippled U.S. stand in the rankings? It is number four, trailing behind New Zealand (3), Hong Kong (2) and Singapore (1).

What it looks like from the research desks at one of the most powerful and elite multilateral institutions on the planet is a U.S. that does not have the government in its way, but a U.S. whose government is more out of the way than it is in every other major economy on earth, including mainland China.

Wow, I wonder if Congressman Paul Ryan reads Forbes? Naaaah… probably too far left for him. And speaking of Ryan, he appeared at a town hall meeting in Muskego, WI yesterday and made a complete ass of himself as usual. From Think Progress:

During a town hall today, House Budget Committee Chairman Paul Ryan (R-WI) was asked by Matthew Lowe, a student, why the GOP wants to cut Pell Grants. Ryan responded by saying that the program is “unsustainable,” before telling Lowe that he should be working three jobs and taking out student loans to pay for college, instead of using Pell Grants:

LOWE: I come from a very middle-class family and under President Obama, I get $5,500 per year to pay for school, which doesn’t come close to covering all of the funding, but it helps ease the burden. Under your plan, you cut it by 15 percent. I was just curious why you would cut a grant that goes directly to the middle- and lower-class people that need it the most.

RYAN: ‘Cause Pell Grants have become unsustainable. It’s all borrowed money…Look, I worked three jobs to pay off my student loans after college. I didn’t get grants, I got loans, and we need to have a system of viable student loans to be able to do this.

That’s funny. I read that Ryan used his father’s Social Security survivor benefits to put himself through college. I’d like to see some documentation on those three jobs he claims he worked while attending classes, writing papers, and studying for exams. Besides, I’ll bet the unemployment rate for college-age kids wasn’t at depression levels back then.

And speaking of paying for college, here’s an interesting piece at Truthout by Ellen Brown: Can the Fed Prevent the Next Crisis by Eliminating Interest on Student Loan Debt?

Among the demands of the Wall Street protesters is student debt forgiveness – a debt “jubilee.” Occupy Philly has a “Student Loan Jubilee Working Group,” and other groups are studying the issue. Commentators say debt forgiveness is impossible. Who would foot the bill? But there is one deep pocket that could pull it off – the Federal Reserve. In its first quantitative easing program (QE1), the Fed removed $1.3 trillion in toxic assets from the books of Wall Street banks. For QE4, it could remove $1 trillion in toxic debt from the backs of millions of students.

The economy would only be the better for it, as was shown by the GI Bill, which provided virtually free higher education for returning veterans, along with low-interest loans for housing and business. The GI Bill had a sevenfold return. It was one of the best investments Congress ever made.

There are arguments against a complete student debt write-off, including that it would reward private universities that are already charging too much and it would unfairly exclude other forms of debt from relief. But the point here is that it could be done and it (or some similar form of consumer “jubilee”) would represent a significant stimulus to the economy.

According to Brown, student loan debt is “the next Black Swan.”

Here’s another stupid Republican story for you. Eric Cantor was scheduled to give a speech yesterday at the elite Wharton School of Business at the University of Pennsylvania. Cantor was to speak on what Republicans plan to do about income inequality. The school was so excited that they opened the talk to the public. In addition, there was to be a protest by several groups, including Occupy Philly.

Guess what Cantor did? He wimped out and cancelled. ROFLOL! From the LA Times:

Cantor was scheduled to speak on income inequity at a lecture hosted by the Wharton business school. The Virginia Republican’s office said he called off the speech after learning that protesters planned to rally outside and attendance would not be limited to students and others affiliated with the school.

Ron Ozio, director of media relations at University of Pennsylvania, said the business school “deeply regrets” that the event was canceled.

“The university community was looking forward to hearing Majority Leader Cantor’s comments on important public issues, and we hope there will be another opportunity for him to speak on campus,” Ozio said in a statement. “The Wharton speaker series is typically open to the general public, and that is how the event with Majority Leader Cantor was billed. We very much regret if there was any misunderstanding with the Majority Leader’s office on the staging of his presentation.”

This is pretty disgusting: Libyans line up to see Gaddafi’s body on display; groups call for probe into death

International human rights groups called Friday for an investigation into the death of former Libyan leader Moammar Gaddafi as gory new videos showed him being spat at and punched by revolutionaries and as skepticism mounted about official claims that he was shot in crossfire after being captured.

The new cellphone videos cast a shadow over the revolutionaries even as they were celebrating the end of their eight-month struggle to wrest control of the country. NATO had backed the rebels in the name of shielding pro-democracy civilians from Gaddafi’s brutality.

“The government version certainly does not fit with the reality we have seen on the ground,” said Peter Bouckaert of Human Rights Watch, who has been investigating the capture of Gaddafi in his home town of Sirte. Amnesty International warned that the killing could be a war crime.

Why do I suspect the U.S. Government gave the go-ahead for Gaddafi to be executed, just like Osama bin Laden? You might want to read Joseph Cannon’s take on this one.

Finally, late last night the Volker Rule was number 1 in Google’s top stories. From the NYT:

When Paul Volcker called for new rules in 2009 to curb risk-taking by banks, and thus avoid making taxpayers liable in the future for the kind of reckless speculation that caused the financial crisis and resulting bailout, he outlined his proposal in a three-page letter to the president.

Last year, when the Dodd-Frank Wall Street Reform and Consumer Protection Act went to Congress, the Volcker Rule that it contained took up 10 pages.

Last week, when the proposed regulations for the Volcker Rule finally emerged for public comment, the text had swelled to 298 pages and was accompanied by more than 1,300 questions about 400 topics.

Wall Street firms have spent countless millions of dollars trying to water down the original Volcker proposal and have succeeded in inserting numerous exemptions. Now they’re claiming it’s too complex to understand and too costly to adopt.

Gee, what a surprise. I wonder how many of those millions were taxpayer dollars?

So…what are you reading and blogging about today?

Student Loans: Bubble, Bubble, Toil & Trouble

I laughed pretty loudly when I opened an email from the university to my faculty account explaining how wonderful the increased retention numbers were looking!  Our new funding formula from extortionist governor Bobby Jindal depends on graduating and retaining students.  I guess they don’t have economists in that section of administration.  Just look at the unemployment rate for the typical student population  (16-24 year olds) and the decreasing labor force participation rate from August, 2011.  You’ll see exactly what’s going on.  Got no job?   Where do you go to find money and hopefully place yourself higher up on the meat market ladder if businesses ever go back to hiring?

The number of unemployed youth in July 2011 was 4.1 million, down from 4.4 million a year ago. The youth unemployment rate declined by 1.0 percentage point over the year to 18.1 percent in July 2011, after hitting a record high for July in 2010. Among major demographic groups, unemployment rates were lower than a year earlier for young men (18.3 percent) and Asians (15.3 percent), while jobless rates were little changed for young women (17.8 percent), whites (15.9 percent), blacks (31.0 percent), and Hispanics (20.1 percent).

So, we’ve got the biggest numbers of young people since the baby boom with parents whose employment situation is not great and whose assets and real incomes have taken a major hit over the last ten years.  We’ve got kids that can’t even find the usual kid jobs.  What are they going to do but go for those student loans and hang at university as long as possible? This brings me to the next big bubble phenomenon–Student Loans–plus the next GSE that’s going to be seeing default rates sky rocket.  That would be Sallie Mae.

Here’s the headline today: Unpaid student loans top $1 trillion.  That’s a lot of tuition, books and dorm rooms.

The $1 trillion of outstanding loans means that Americans now owe more on student loans than on their credit cards. While students have been racking up educational loans, American consumers have been paying down credit cards and home loans.

The average full-time undergraduate student borrowed $4,963 in 2010, up 63 percent from a decade earlier, even after adjusting for inflation, the report says.

Meanwhile, with a greater loan burden, the percentage of borrowers that defaulted on their student debts also rose – from 6.7 percent in 2007 to 8.8 percent in 2009.

That gives a lot of credence to the argument that the next big bubble will be in student loans. Here’s an investor’s view point from seeking alpha from back in July.  Should we all start hedge funds and short student loans?  Well, for one thing.  You can short sell for profit university’s stocks who thrive on churning loans and assume Sallie Mae will be a goner just like its buddies Fannie and Freddie. Dump their bonds and short them!

With the current state of the job market, many if not most of these unfortunate borrowers will not be able to pay off their debt with a lower than expected income. This trend is showing itself through increasing default rates of student loans. Three-year default rates have risen from 11.8% for loans issued in 2007 to 13.8% issued in 2008 (most recent data available). Meanwhile, the fundamental factors driving these defaults have not changed since.

Historically, investors have not worried about the default of these securities because of their explicit government guarantees through FFELP. In addition to this, student loans are the only debt that cannot be forgiven through bankruptcy. Student loan collectors have gone to the extent of garnishing wages and racking up penalties that can double the borrower’s debt in the name of “forgiveness” to maintain a return for bondholders.

This story sounds similar to housing: If the borrowers fail to pay, lenders seize the asset (house for a mortgage, garnished wages for student loans). The story will end the same way, as students lack the income to maintain their living expenses plus the debt or even just the interest payments if they are unemployed. The other option that students will begin to take more is moving abroad to avoid collectors. Financial distress will make it practical to exile oneself to avoid a lifetime of debt slavery. The combination of lower incomes for college grads and expatriation will increase the default rate to even high levels than current record rates.

So how do investors go about shorting the bubble in higher education? Ideally, the best way would be to buy credit default swaps on student loan asset-backed securities, which have a similar construction to the mortgage-backed securities that caused the last financial crisis. However, this strategy is not available to most readers. Average investors are better off short-selling the leading providers of student loans or for-profit universities, which have some of the highest default rates of student loans for any academic institution.

The leading student loan provider in the United States in the Sallie Mae corporation (SLM). It was launched as a government-sponsored enterprise (since privatized) similar to Freddie Mac and Fannie Mae; it currently services and manages $180.4 billion of government-backed student loan debt. It’s also begun to issue private student loans as well. With a debt to equity ratio of 36, Sallie Mae is already on the edge of insolvency. A small drop in collections can amount to significantly levered losses to the company. If the student loan default rate increases to 20%, Sallie Mae will most likely not be able to survive. The continuing upward trend of student loan defaults will lead to either insolvency of Sallie Mae or a government takeover — which will both wipe out shareholders.

Above the Law even asked if there was any one out there left that even believed that this wasn’t a disaster waiting to happen.  How’s this for harsh?

The problem is that our colleges and universities are charging a $100,000 to pump out the next generation of dog walkers. Sure, part of the fault lies with the people themselves; parents who let their 18-year-old children borrow a ton of money to go to an expensive private university to major in art history are no better than strung out crack mothers.

But the dean who sits there and says, “come study comparative literary criticism for the low, low price of $40,000 per year,” is the price-gouging drug dealer. These deans are pushing a product at a price point that they know is dangerous for most of their consumers.

This is what worries me.  This is also from Above the Law and it mentions just how married you and yours going to be to that student loan.  Not only that, but graduate students will have a much bigger balances to pay in the future thanks to an Obama sell-out on the deficit. Talk about setting people up for loan failure.  Why not just pump the least able to pay for more money?

In the total debt ceiling cave-in that will mark Barack Obama as the most successful Republican president since Ronald Reagan, there was one cut that really illustrates how little the president cares for his young, college-educated constituents. To save about $26.3 billion dollars, the debt ceiling deal eliminates the graduate student loan subsidy. That means that law students (and other grad students) will continue accruing interest on their non-dischargeable educational loans throughout their graduate studies.

I can see why they call education the “silver bullet,” because education certainly seems like a surefire way to kill one’s economic future….

The graduate loan cut wasn’t the most ridiculous so-called compromise Obama made while John Boehner was pumping him like Richie Aprile did to Janice Soprano. But it is illustrative of the extent to which Obama has abandoned the young people who helped elect him so that he can court… well, I don’t know exactly what universe he lives in where he thinks a black Republican running as a pro-war Democrat wins a general election

Meanwhile back on the Planet of  anecdotal evidence, we get these examples.    Ask me about Doctor Daughter’s student loan debt or mine, for that matter.  I got two degrees in the late 70’s and early 80s by working and that was it.  I just couldn’t swing it this time.  I now have student loan debt that would’ve bought me a Mercedes and I’m jobless and on the jobfree labor market.  Sallie Mae’s like a loan shark too.  They’re worse to deal with than the bookies in my neighborhood.

“I have ~$75k in student loans. I will default soon. My cosigner, my father, will be forced to take my loans. He will default as well. I’ve ruined my family because I tried to rise above my class,” writes one testimonial on the 99 percent website on Wednesday.

The 99 percent website is one of the places where the Occupy Wall Street movement first got its inspiration from.

“I am a young medical professional who BARELY makes it paycheck-to-paycheck because I have OVER $200,000.00 in student loan debt,” says another testimonial on the website Tuesday. “I pay almost $1,000 a month just in student loan repayment. I will have to do so for the next 30-years. How will I ever afford to buy a house, have children, or save for the future?”

So, if you’ve got the money. There’s your next big bubble that will burst. Instead of creating homeless people, we’ll just be creating more jobless people that will go to their graves with student loan payments.  Look for me because if things don’t get any better, I’ll be right there in that number and I didn’t even get a fun doctorate in something like Medieval Literature or Art History.

Saturday: Walk Like a Bahraini Youth Activist

Click Image to go to the NYT Lens.

Good morning, news junkies!

I’ve gotten quite hooked on the NYT’s new Lens blog, particularly the regular interview/photo essays compiled by Lens editor James Estrin. A couple months ago, Estrin zoomed the focus in on Eirini Vourloumis and her photographs of Spanish-speaking converts to Islam–you may remember my linking to the interview at the time. This week’s spotlight is on Hazel Thompson and her work documenting the roles of women in Bahrain. There’s also a video of Thompson discussing her experiences at the link. Fascinating stuff.

To the right… from Hazel Thompson’s “Measure of a Woman”… The Youth Activist: Enas Ahmed Al-Farden is the vice president of the Bahrain Youth Forum Society. She is also a radio announcer and a product marketing manager. She lives with her parents and is engaged to be married.

If you have some free time after you’re finished reading this roundup, both the spot on Bahraini women and the earlier one on Latino Muslims are well worth the investment. (I’ll link to them again at the end.) In the meantime, here are the rest of my Saturday picks… grab a cup of whatever gets you up and running in the morning and enjoy.


  1. As of November, men’s unemployment is down .04 percent over the previous 12 months, and women’s unemployment over the same period is up .04 percent. Between July 2009 and January 2011, women lost 366,000 jobs while men gained 438,000.
  2. The public sector has shed 426,000 jobs since August of 2008. 154,000 of those jobs were in education. Women comprise only a little over half of the public workforce but have lost 83.8% of the jobs during the recovery-in-name-only.
  3. And, just look at who is exempt from Walker’s proposal to strip collective bargaining: public officers, firefighters, and state troopers. It’s the public employee unions made up mostly of women that are facing threat of annihilation.

  • Wonk’s two cents: The Taxed Enough Already (TEA) crowd never shuts up about the “debt we’re creating for our children,” but they sure don’t seem to be looking in the right place if that’s what they’re really concerned about.

although borrowers who develop severe and lasting disabilities are legally entitled to get federal student loans forgiven, the process for deciding who is eligible is dysfunctional, opaque and duplicates similar reviews conducted by other federal agencies. Many borrowers have been denied for unclear reasons, and many others have simply given up.

  • On Thursday, Zaid Jilani from Think Progress posted the graph I’ve been looking for. This is what the workers in Wisconsin, Ohio, and Indiana are protesting:


Women’s Rights

  • The Center for Reproductive Rights’ Melissa Upreti, via RH Reality Check, reports that Nepal Advances As U.S. Backslides on Women’s Rights.” What takes the cake is that Nepal’s Supreme Court cites Roe in its groundbreaking affirmation of a woman’s autonomy, access to abortion, and well-being over that of a fetus. I almost want to laugh and tell Nepal’s Supremes that their ruling sounds better than Roe. Our dear Roe has, among other things, successfully kept women’s rights in perpetual limbo for almost 4 decades. As much as I believe in the privacy argument, I’m a much bigger believer in the autonomy and equity arguments.

  • Here’s a good companion essay to read after Clark’s piece. Margot Badran, via the SSRC’s Immanent Frame, writes of Egypt’s Revolution and the New Feminism.” From Badran’s pen to the goddess’s ear:

Will the youth now be willing to accept patriarchal authoritarianism sustained by the old family law, a law so out of sync with contemporary social realities—with their own realities? It is very hard to see by what logic they could do so. Freedom, equality, and justice cannot be reserved for some only. For the youth, female and male, who raised this revolution, freedom, equality, and justice are surely non-negotiable, and dignity, the order of the day. This is the essence of the new feminism, call it what you will.

  • I missed this one last week. William John Cox’s “Political Upheaval and Women’s Rights,” via Truthout. Excellent long view essay. Cox really lays it all out there. Fundamentalism is a threat to women everywhere, be it in the Mideast or in the US.

[There’s more, so if you need a coffee refill or anything, now would be a good time for an intermission before you click to continue. ]

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